Total licensing revenues for OTT and campus offices rose 6% in FY97
to $74.7 million. Revenues include income from royalties, agreement issue
and other fees, as well as expense reimbursements. This continues the steady
upward trend reported over the past several years (Exhibit 10).

Royalties and Fee Income

The portion of licensing revenues from royalties and fees increased
6% in FY97 to $67.3 million. Exhibit 11 indicates the income that OTT and
each of the campus licensing offices contributed to this component of FY97
revenues.

*Adjusted gross income takes into account royalty income received
by the Unviersity that is passed on to other institutions who are joint
owners of income-generating patents -- see section on Payments to Joint
Holders, p.16.

Five hundred twenty-eight (528) inventions generated royalty and fee
income in FY97. Income from the top five royalty-generating inventions
contributed $49.6 million in FY97 (Exhibit 12), accounting for 74% of total
income. The top twenty-five royalty-generating technologies collectively
accounted for $59.2 million or 88% of total income. Four utility inventions,
Liposome Sizing Method, Interstitial Cystitis Therapy, Energy Transfer
Primers, and Liposome-Ligand Coupling, appeared on the list for the first
time in FY97. The UC invention portfolio is considered to be especially
strong because it has a large number of diverse inventions generating earned
royalty income at a high level, as well as new inventions moving into the
top group each year. Expense Reimbursements In addition to income from
royalties and fees, the University received $7.4 million in expense reimbursements
from its licensees in FY97. Reimbursements typically cover legal costs
associated with patenting an invention. Reimbursements are a high priority
objective during the license negotiation. Such reimbursements are considered
to be part of total licensing revenues, although they are treated as an
offset to legal and other direct expenses for financial reporting purposes
(see section on Legal Expenses).

* List includes only commercialized inventions with earned royalties
and therefore does not include a UCSF invention that is not yet commercialized
but generated over $340,000 in agreement issue fees in FY97.

Expense Reimbursements

In addition to income from royalties and fees, the University received
$7.4 million in expense reimbursements from its licensees in FY97. Reimbursements
typically cover legal costs associated with patenting an invention. Reimbursements
are a high priority objective during the licnese negotiation. Such reimbursements
are considered to be part of total licensing revenues, although they are
treated as an offset to legal and other direct expenses for financial reporting
purposes (see section on Legal Expenses.)